IKEA Japan – the key to attracting Japanese consumers

IKEA’s failure

Did you know IKEA Japan failed to enter the Japanese market in the ‘80s? When they entered the Japanese market in 1974, IKEA partnered with Mitsui Bussan (Trading company) and Tokyu department store. They had 2 small stores but this meant fewer products with variations that suit Japanese homes and lifestyles. The lack of market research resulted in providing Scandinavian standard size furniture which didn’t fit into Japanese houses and lifestyles. 

Learning from the failure – Localised Marketing

When they returned to the Japanese market in 2006, they strengthened their market research. IKEA doesn’t design products specifically for the Japanese market. They select suitable products from their ever-expanding product line-up. For this reason, they are conducting market research meticulously by visiting individual customers’ homes. As a result, they discovered that consumers were looking for more ideas to decorate and improve bedrooms. Since then they have been focusing on bedroom furniture and interior decoration to grow sales. 

They have opened three smaller format city-centred stores in Tokyo in the past 18 months, a new type of format now rolling out in other countries. IKEA is known for large warehouse-style showroom stores in suburban areas and I’m sure Londoners were surprised when they heard IKEA UK is opening a store in the former TOPSHOP building in the heart of bustling Oxford circus with no parking space. 

There is plenty of scope for these kinds of accessible city-centred stores. JapanConsuming reports that rents in Japanese cities aren’t necessarily low but are falling in many areas and these stores are still a fraction of the cost of building 20,000 sqm showrooms in most Japanese suburbs. These stores also market the brand to new segments, particularly older customers who have, so far, generally eschewed the long trek out to suburban stores and the 2-3 hours needed to walk around. IKEA will be hoping to see a broader age range from its smaller stores as well as reach all those busy singles with no time to visit larger showrooms. 

It should be remembered that the shopping experience equals entertainment for Japanese consumers. Many people visit IKEA Japan with no purchase in mind. IKEA’s food offering is one of the strong attractions and people visit to experience their food. The one clear difference compared to IKEA UK is that IKEA Japan is focusing on their in-store food experience. They often run nationwide promotions to offer attractive seasonal menus such as matcha and sakura sweets in the Springtime. These limited-time menus entertain people enough to come back to the store to spend more time. Also, they make you walk a long time as you go through the winding path. This is the same tactic used for Disneyland, where the winding paths make the place bigger than the actual size so that customers stay longer. IKEA is clearly making the store a destination for a family day out. 

Read: Booming home decoration market in Japan

IKEA Japan has a bright future

At the moment, IKEA operates as an unlisted company and they aren’t aiming for a short-term gain. The company now has 12 stores and is expanding. 

JapanConsuming reported, In the year to August 2020, the Japan franchise saw sales of ¥86.7 billion, up 2.7%, with operating profits of ¥1.9 billion, returning to profit after three years of losses. IKEA remains one of the most successful and high potential international retailers in Japan. Results may show a small hit from lack of footfall at its stores last year, but with more singles, more older people, and few competitors that can match its brand offer, the Swedish furniture chain still has a bright future in Japan.

IKEA Japan is taking advantage of the current growth in interest and demand for interior products in Japan. Do you want to find out about the interior product market in Japan? Then do get in touch!

Resources 

JapanConsuming 

Toyo Keizai